Codo Advisory keeps an eye for you on the latest events and trends in climate finance and corporate sustainability, in the world and in Japan. Here’s what caught our attention last week.
Japan | Japan launches new decarbonization dialogue with Central Asia
- Japan and five Central Asian countries (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan) are forming a new partnership to collaborate on decarbonization and energy.
- The aim is to use Japanese technology and financial support to accelerate decarbonization efforts in the region.
- This initiative also serves as a strategic move to counter the influence of Russia and China in Central Asia, which is rich in natural resources and energy potential.
- Key focus areas include achieving net-zero emissions after 2050 and promoting a bilateral credit system for greenhouse gas reductions, with Japan’s technology contribution.
- Read more about this story: Nikkei Asia, NHK News
Codo’s comment: This is a rather brilliant strategic move on Japan’s part. We expect Japan’s contribution to consist primarily of CCS and ammonia/hydrogen technologies as they have been the focus of Japan’s domestic development efforts for many years now. The international distribution of Japanese green technology serves to challenge China’s here-to-for established leadership in green technology manufacturing and distribution (primarily of solar and wind technologies) directly in the heart of China’s New Silk Road/One Belt One Road initiative. By coupling the technology distribution with the establishment of a bilateral credit system, they incentivize the use of Japan’s specific technology. Codo expects that Japan will also use these credits to bring international players into the newly opened Japanese carbon trading markets and increase availability of carbon credits for purchase by Japanese corporations, many of whom are relying upon such purchases to meet their 2030 and 2050 emission reduction goals.
Asia | Indonesia Launches Carbon Credit Trading Under Net Zero Push
- Indonesia has launched a carbon credit trading system as part of its commitment to achieving net-zero emissions.
- This system provides incentives for businesses and industries to reduce their carbon emissions by allowing them to monetize their emission reductions through the sale of carbon credits.
- Indonesia’s participation in carbon credit trading is in line with global efforts to combat climate change and reduce greenhouse gas emissions, contributing to international climate goals and agreements.
- Read more about this story: Bloomberg Green, Reuters, Nikkei Asia
Codo’s comment: Indonesia’s entry into the carbon credit market is met with much international corporate support, as many of the carbon projects in Indonesia can be conducted at a fraction of the cost as compared to more developed countries where carbon markets are more prevalent. An established crediting system also has potential to greatly contribute to environmental sustainability as a counter incentive to the established practices of mining Indonesia for its extensive resources using degrading methods. In addition, many Asian countries, including Japan, are looking to Indonesia for its uniquely expansive carbon storage potential and central location. A carbon crediting system is one of the steps to establishing an international carbon storage supply chain. Implementation will need to be closely monitored by NPOs and the scientific community, however, as many existing industries have struggled to enforce regulations. The still-developing nature of carbon trading leaves many potential grey areas for predatory market forces to exploit the system, as has been seen around the world already.
United States | California Sues Giant Oil Companies, Citing Decades of Deception
- The state of California has filed a lawsuit against major oil companies (including ExxonMobil, Chevron and Shell), alleging that they engaged in a decades-long campaign to cover up the risks of climate change caused by their products.
- California asserts that these oil companies knew about the environmental impact of their products but deliberately misled the public and policymakers to protect their profits.
- The lawsuit claims that these companies violated California’s environmental laws and seeks financial penalties for their alleged deceptive practices. It also aims to hold them accountable for the costs associated with climate change, such as wildfires and rising sea levels.
- Read more about this story: The New York Times, Financial Times, Reuters
Codo’s comment: This case is characteristic of the United States’ unique economic and social system in which corporations drive much of the state of affairs and consequences are punished after the fact. Given the now public documentation proving prior knowledge of the harmful effects of their products as early as the 1970’s, we are eager to see this case play out. The important piece will be for the state to prove that there were active disinformation campaigns, rather than just complicit ignorance. Assuming the state wins their case, expect it to be appealed all the way to the Supreme Court and any payout to be long delayed.
Europe | Europe’s power industry warns ageing grids risk green goals
- Europe’s power industry warns that ageing electricity grids pose a significant risk to the region’s ambitious green energy goals.
- Outdated and insufficient grid infrastructure may struggle to handle the increasing integration of renewable energy sources like wind and solar power.
- Grid modernization is crucial for accommodating the intermittent nature of renewables, preventing grid instability, and ensuring a smooth transition to a low-carbon energy system.
- This warning underscores the importance of investing in grid upgrades and infrastructure improvements as a critical component of Europe’s efforts to transition to a more sustainable and decarbonized energy sector.
- Read more about this story: Reuters, The Business Times
Codo’s comment: In the public dialogue around renewable energy, effective transportation and distribution often become overlooked as many look at the power lines going into their houses and consider that part of the issue solved. In actuality, most power grids are over half a century old and have seen only the absolutely necessary repairs or updates within that time. They are not designed to handle the increased modern demand or distributed and intermittent supply loads of our era. The good news is researchers and corporations have been designing “smart grid” technologies in response to this for the past decade. The bad news is these problems are in no way confined to Europe. The US faced similar challenges in Texas when a severe winter storm crippled their power grid. Japan, while more disaster resilient, does not even use a consistent electrical frequency, requiring extra infrastructure and making it far more difficult to effectively distribute electricity from areas of generation to areas of demand.
World | Fossil fuel demand must fall by a quarter by 2030 to limit global warming, but Net Zero by 2050 Still Remains Possible With Rapid Renewables Expansion, Says IEA
- Fossil Fuel Demand Reduction: The IEA calls for a 25% reduction in global fossil fuel demand by 2030 to combat global warming.
- Net Zero by 2050 Still Achievable: Despite this reduction, the IEA maintains that achieving net-zero emissions by 2050 is possible with rapid expansion of renewables.
- Renewables Are Key: The IEA highlights the need to greatly increase renewable energy capacity to replace fossil fuels.
- Urgent Climate Action: Immediate and ambitious climate action is crucial to limit global warming and ensure a sustainable future.
- Read more about this story: Bloomberg Green, International Energy Agency, Nikkei Asia, Financial Times
Codo’s comment: The need to rapidly phase out fossil fuels is not a sudden demand. But due to slow action delayed by extensive investments in so called “low emission” fossil fuels such as LNG, we have now reached a critical point where without immediate action we will fail. Our distracted efforts have proven entirely ineffective with LNG having been proven to have severe methane leaks throughout their distribution, raising their total emissions to be equivalent to that of coal. Now we face an immediate need requiring utmost speed. The urgency of the transition to renewable energies will likely result in less care being placed upon the total supply chain of renewable energy technologies, causing further environmental damage through mining practices and severely limiting the success of a just transition. This is an example of “transition risk” coming into reality. When an inevitable transition must be rushed due to poor planning and delayed action, the result will have additional costs that could have been avoided. However, further delay of action is not an option as it will only increase those additional social and environmental costs, resulting in severe economic costs.
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The above article is a summary of news hand-picked and commented on by our team of experts. We monitor a selection of leading international and Japanese sources, including generalist and specialized press, communication from public authorities, and publications from recognized non-profit organizations.
Codo Advisory is a Japan-based consulting agency offering independent advisory services to help Japanese companies define and refine their low-carbon transition strategy, to reduce their risks and reinforce their global competitiveness. Feel free to read more about our services and team, or contact us if you’d like to discuss how we can work together.